Crocs Inc. swung to a net loss of $27.8 million in the third quarter ended Sept. 30 after holding back shipments to Chinese distributors.
The Niwot, CO footwear company reported revenue of $274.1 million, down 9.4 percent, or 0.8 percent in currency-neutral terms.
Excluding certain non-recurring and special charges, the company reported a non-GAAP adjusted net loss attributable to common shareholders of $19.2 million.
“We delivered third quarter sales in line with our revised expectations reflecting challenges in China and currency,” said CEO Gregg Ribatt.
For the third quarter, revenue on a constant currency basis and adjusted for business model changes was up 3.7 percent.
A mess in China
“Our China business is undergoing changes as we transition away from under-performing distributors,” Ribatt said. “We faced some difficult decisions in China and as a result we increased reserves for doubtful accounts by $19 million at the end of the third quarter. We also held shipments to several of our China distributors, which negatively affected Q3 revenue by $4.0 million. However, these actions set us up for improved business performance in the future.”
Crocs aggressively cleared out aged and excess inventory which impacted margins in the quarter, in a move Ribatt said positions the company for improved results in 2016.
“Our core business continues to stabilize around the globe and we believe the strategy we outlined last July is positioning Crocs for sustained success in the future,” said Ribatt. “The company continues to make meaningful progress implementing our strategy which includes: strengthening our brand; elevating our product stories; evolving our international business to focus on our six core markets; strengthening our relationships with key wholesale partners; improving our direct to consumer capabilities; simplifying our business model; enhancing our supply chain and building a best in class management team.”
The following tables summarize our total revenue by channel for the three and nine months ended September 30, 2015 and 2014:
| Three Months Ended September 30, |
Change |
Constant Currency Change (1) |
||||
| 2015 | 2014 | $ | % | $ | % | |
| (in thousands) | ||||||
| Wholesale: | ||||||
| Americas | $ 48,880 | $ 53,097 | $ (4,217) | (7.9)% | $ (1,629) | (3.1)% |
| Asia Pacific | 53,411 | 63,972 | (10,561) | (16.5) | (4,343) | (6.8) |
| Europe | 30,260 | 33,691 | (3,431) | (10.2) | 2,442 | 7.2 |
| Other businesses | 418 | 435 | (17) | (3.9) | (31) | (7.1) |
| Total wholesale | 132,969 | 151,195 | (18,226) | (12.1) | (3,561) | (2.4) |
| Consumer-direct: | ||||||
| Retail: | ||||||
| Americas | 59,468 | 61,721 | (2,253) | (3.7) | (1,455) | (2.4) |
| Asia Pacific | 38,374 | 44,387 | (6,013) | (13.5) | ||
